Blog | Able Accountants Birmingham

The turn of a new year is the perfect moment to take a look back on the last year and set yourself up for success in this one. These tips will shine a light on to how you can get your business in shape for the new year.

We all make resolutions to change the way we live, but how about the way we work? How about the way our businesses work? Yes, we make decisions about that too, but we often overlook the accounting processes and procedures that form the backbone of our businesses. Why? Our businesses cannot operate without money, so the way we account for it should always improve. The best way to do that is to look over your achievements from last year so you can make good moves in this one.

1. Look Over Your Figures

Take a look through all your sales invoices and make sure all the figures add up correctly. If you run a business that has complex revenue streams this might be a difficult task, but there is an increasing number of high quality software packages that can help you with your accounting. They often include many elements that can aid automation.

2. See Your Accountant

Don’t waste a moment, get your accounts in order now and share the books with your accountant so they can get busy and check them.

If your accountant is any good they’ll be happy to look over your books before the financial year so they can give you a good estimate of how much you will owe in taxes. Having this kind of information as early as possible will help you to be ready with the necessary funds.

3. Review Review Review

Take time to review the last year and answer some questions. Has your business grown? Do your revenues and profits compare favourably with the last year? Are sales up? Are your business expenditures rising? Did you meet all the goals you had in mind for last year?

In answering these questions you are trying to understand your business. If things are looking up, give yourself a round of applause. If not, let’s dig deeper and find out what you can do to improve things. Don’t hesitate to have a chat with your accountant as they may be able to help you to put together a financial plan to realign your aims.

4. Stay Current

Always keep up with the latest tax laws and make sure you meet all deadlines. If you’re not sure about them get in touch with your accountant so you can understand how any changes to regulations can affect the way you do things.

5. Payroll

You should also pay some attention to your internal systems dealing with payroll etc. Again, the right software will make it easier to deal with issues such as bonuses and electronic payments.

6. Accounting Software

Having the right software will make your daily tasks so much easier for you, and you will be able to genuinely revolutionise the way your business works.

7. Goals

What are your goals for the year ahead? It’s easy to just say “make more money”, but what are the things that will help that to become a reality? Do you need to reassess your sales targets? How about revenue streams? Do you need to consider more staff, or doubling down on customer service? Set yourself goals, but make them achievable. There is no point setting yourself goals that will be impossible to achieve as this will only result in frustration.

8. Think: Accounts!

Only with well-managed accounts will you have a business that runs well. Give yourself the right tools and you’ll always be aware of how well your business is doing, meaning you will have the information to make both long-term and daily decisions that will impact performance.

These are just some of the resolutions you should make if you want to run your business more efficiently this year. If you’re still struggling with basic changes you may want to consider at least switching to digital documents, such as receipts. If the scanner is a step too far, using the camera on your phone is a simple way to get a digital copy of your sales receipts and invoices.

Keep to these resolutions and you are sure to see your business grow from strength to strength over the next 12 months.

Wondering what the significant accountancy dates you have to look forward to? You’ve come to the right place. In this regular blog post we guide you through all that is coming up on the accounting horizon, so you need never miss out on the big dates on your calendar.

New Advisory Fuel Rates for Company Car Users

Each December HMRC reviews the recommended rates for fuel used in company cars and this December has been no different. The latest advisory fuel rates (AFR) are published as they pertain to company car users.

The new rates are effective from 1st December, 2018, but the previous rates can continue to be used for another month, at the most, from the date that the new rate comes into force.

Cleared Payment Deadline for VAT Return

This is the deadline on the 7th December by which HMRC should be in receipt of your cleared funds for your VAT Return filing for the period ending with the 31st October, 2018. Don’t be late with this as penalties can apply.

Deductions for PAYE, student loans and CIS

Wednesday 19th December is one is for employers who make deduct PAYE contributions from salaries of their employees. It also applies to contractors who have engaged and paid subcontractors under CIS.

This is the update due for the month running up to the 5th December that necessitate the payment of contributions for HMRC of income tax, national insurance and student loans. Under the CIS contractors are obliged to make the relevant contributions of tax deductions from the pay of subcontractors to the HMRC.

If you normally make your payment electronically, the deadline for payment to have cleared is Friday 21st of December, 2018. You can also arrange a “Faster Payment” for funds to clear by Saturday 22nd December. Don’t forget that you are liable for interest if the payment is overdue and penalties may also apply.

Electronic Payment Deadline for PAYE, NICs and CIS

If you’re using the “Faster Payment” facility to submit your remittance to HMRC for PAYE, NICs and CIS to HMRC, the date the funds need to have cleared is 22nd December.

This deadline of Sunday 30th December specifically applies to employees who complete an online self assessment tax return. If an underpayment has occurred, the employee can ask HMRC to collect the outstanding balance with an adjustment to their tax code for 2019/2020.

That’s everything for December! Have a spectacular festive season and check in with again soon for updates and news for the new year.

Scottish Budget - Key Points

Many of you will be interested in learning the latest from the Scottish Budget, the draft of which Finance Secretary Derek Mackay delivered on 12th December. Amongst the announcements were those about new bands for income tax and Land and Buildings Transaction Tax changes.

Income Tax

With its devolved powers the Scottish government can set the rates and bands of income tax for Scottish resident taxpayers. Here are the income tax rates and bands for 2019/2020 that will be under consideration by Parliament.

2018/19

2019/20

Name of Band

Rate

Over £11,850 - £13,850

Over £12,500 - £14,549

Starter Rate

19%

Over £13,850 - £24,000

Over £14,549 - £24,944

Scottish Basic Rate

20%

Over £24,000 - £43,430

Over £24,944 - £43,430

Intermediate Rate

21%

Over £43,430 - £150,000

Over £43,430 - £150,000

Higher Rate

41%

Over £150,000

Over £150,000

Top Rate

46%

Changes to Land and Buildings Transaction Tax (LBTT)

Higher rates of LBTT are in force on additional residential properties. These include buy-to-let properties and second homes.

If an individual owns two or more residential properties the Additional Dwelling Supplement (ADS) may come into force. An increase for ADS has also been announced meaning that it will go up from 3% to 4%.

Non-Residential Rates and Bands

The lower rate of non-residential LBTT is scheduled to be reduced from 3% to 1%, while the upper rate will go up from 4.5% to 5%. Meanwhile the upper rate starting threshold will come down from £350,000 to £250,000.

The rates and bands for non-residential LBTT transactions that are under consideration are as follows:

The past weeks have seen some truly frantic action on both sides of the Brexit lines with both the UK and EU contingents trying to steer a course through the choppy seas, and bracing themselves for impact. The time for negotiations is all but up for Theresa May, with a deal yet to be confirmed with the EU at the time of writing.

You can read the entire proposal agreed with the EU, but save yourself some time and read our summary of how Brexit may impact business accounting and finances. May’s proposal will see the UK face many difficulties, but the outcome of the Brexit negotiations depends on whether the deal is approved, or not.

You will already know that there are two possible outcomes. Either the proposal is approved, or Theresa May is denied her deal. The former may lead to longer-term confusion and difficulties. However, the latter would mean significant short term uncertainty which would be alleviated in time, after the transition period.

What this article aims to tackle is the question of how Brexit will impact professional accountants, tax advisors, and the kind of effect our clients can expect to feel. Since the Brexit result was announced uncertainty has slowly crept into the lives of every person in the UK. In the last few weeks we have seen the pound fluctuate, hitting all-time lows before achieving a degree of stability again. What many from the business community are asking their accountants is what will definitely change, and what will not change.

What we have determined is that there are 4 ways that things may change for your business’ accounting and taxes:

1. Guidance will need to be offered in a timely fashion by all relevant advisory service providers.2. The UK government will need to develop a greater presence when it comes to Corporation Tax.3. Changes, such as the Flat Rate Scheme (FRS), will have an impact upon VAT.4. Issues, such as FRS, will also have an impact on accounting and the law.

Let’s take a look at these four elements in a little more detail and spell out what we have been able to deduce so far.

1. The Advisory Services

Sooner rather than later, businesses will need dependable advisors who will have an in-depth knowledge of the forthcoming changes. These changes will spread and have far-reaching consequences throughout the taxation and accountancy processes and systems that are currently in place.

So many of the regulations and laws governing the accounting and taxation advisory profession are either linked to EU principles, or directly overseen by directives from the EU. This means that it will be necessary for the UK government to roll out a raft of changes to meet the needs of different users as the economy reacts to the various changes.

2. Corporation Tax

It is very likely that Corporation Tax will undergo some severe changes. These will include the need for it to have heavier regulation from the UK government as we transition in the months and years ahead.

Some of the biggest issues to cast a shadow over larger businesses that operate and trade outside of the UK will be:

● Double taxation● High rates of tax

For companies that keep their operations within the UK there will also be changes ahead. These will most likely appear in the way of tax hikes.

3. VAT

Despite VAT being an EU concept that the UK government of the time readily put into practice, it is highly unlikely that the UK government will now look to get rid of VAT. Such is the massive revenue stream from VAT to the national economy that the government will sooner change VAT rates, rather than declare it obsolete and remove it altogether.

Any changes in VAT will necessitate a reaction, and development of new accountancy practices. It will be imperative for all types of businesses to readily adhere to any changes to the way VAT is handled. You can count on us to guide you through all the changes relevant to your business.

4. Legal Aspects of Your Accounting

The Flat Rate Scheme has had the additional result of major changes for the way that your financial reports are compiled. Brexit will lead to further changes as the ties that bind UK regulation to EU directives are removed. The UK government will be keen to remove the impact of EU directives that do little to improve things for UK businesses.

In their place new policies will be created to more directly benefit UK businesses and the UK government. How these new regulations will come into force, and impact the economy, remains unclear, but this will result in a raft of changes.

Some Words of Advice

There is a lot of speculation across all sorts of media, and it is tempting to get caught up in it all. However, until things become clearer about the long-term effects of Brexit, it is advisable to keep an open mind so we can weigh up the firm facts when they do finally arrive. You’ll know by now that we always keep ourselves up to date with the latest developments, so you can count on us to give you the right advice whatever occurs.

If you’re keen to read the latest events and news for November, as they related to accountancy, you’re in the right place. We’re keen to give you all the latest info and keep you in the loop so you have all the essential details from the world of accountancy, right at your fingertips.

We regularly post updates, so check back here to absorb the latest happenings and discover how they can impact your accounting matters.

“No Deal Brexit” Contingency Plans

A Partnership Pack has been announced and issued by HMRC in an effort to help businesses to plan and also to help customers as thoughts turn to the following:

1. Adapting business to work with new systems and processes.2. The effect of increased customs declarations.3. Recruitment and training of additional staff.

The Confederation of British Industry (CBI) has reported that amongst UK businesses “patience is now threadbare” as the government continues with Brexit talks. The Director General of the CBI, Carolyn Fairbairn, went on to say:

“The situation is now urgent. The speed of negotiations is being outpaced by the reality firms are facing on the ground. Unless a Withdrawal Agreement is locked down by December, firms will press the button on their contingency plans. Jobs will be lost and supply chains moved. As long as 'no deal' remains a possibility, the effect is corrosive for the UK economy, jobs and communities.”

Employers Issued New Guidance

Payroll issues have received an update with the October 2018 Employer Bulletin, issued by HMRC. A handful of articles within the publication covered a raft of areas, such as:

1. Clearer rules for paying employees whose regular payday falls on a non-banking day.2. Reminders for contractors for the Construction Industry Scheme.3. Clarification on rates of pay for apprentices.4. Tax code adjustments happening in real time.5. Childcare vouchers and the offer of directly contracted childcare to be closed to new entrants.

Changes to Capital Allowances

The latest budget included a raft of changes to capital allowances, such as the 2-year increase, from 1 January, in the Annual Investment Allowance (AIA) to £1,000,000, as it pertains to qualifying expenditure. Currently the AIA stands at £200,000 per year.

There are other changes and they include:

1. Plant and machinery pool’s special rate is to be reduced. This includes long-life assets, integral features and expenses on cars higher than 110g/km of the CO2 emissions.2. Plant, and machinery, installations can result in land alterations, and there are some costs that may qualify for capital allowance. These costs are to be made clearer for claims.3. There is currently a 100% allowance in the first year for expenditure incurred on electric charge equipment. This will be extended until 2023.

There shall also be a fresh capital allowance programme that will be introduced for structures and buildings, and will be titled: The Structures and Buildings Allowance. This will be available for new non-residential structures and buildings.

Changes to Personal Tax

One of the biggest matters to come out of the most recent budget was that there will be increases to the personal allowance and basic rate band for 2019/2020.

£11,850 is the current personal allowance, but this will increase for 2019/2020 to £12,500. For that same period the basic rate band will also be increased to £37,50. This means that the 40% rate will be £50,000 for those entitled to the full personal allowance. Additional rate tax (45%) will remain in effect for incomes over £150,000 liable to taxation. This is in keeping with the government’s policy to increase thresholds by 2020/2021.

Deadline For Submitting Form P46 (Car)

The all-important P46 (car) is due on the 2nd November and this is a significant date your accounting calendar, so don’t overlook it may have a dramatic impact you.

What is the P46 (car)? Let us refresh your memory. It is for employees who take advantage of car/fuel benefits, specifically those employees who saw a change to their benefits in the third quarter of this year, running up to 5th October, 2018.

A form P46 (car) needs to be completed for any employee who uses a car that has been provided by their employer. The specific situation where a form P46 (car) is required is where:

● a car was initially supplied to an employee by an employer● an additional car was supplied to an employee by an employer● an employer took back a car they had supplied to an employee and it wasn’t replaced

Why is the form P46 (car) necessary? Well, with one of these completed forms HMRC can update the employee’s coding notice so that it corresponds with the change in benefit that the employee is receiving, or no longer receiving.

The form can be submitted either online, or by completing a hard copy and sending it in. In cases where a car has been taken back by an employer and replaced with another, the change can be made online.

Watch out! The form P46 (car) should not be used to notify HMRC of any changes in car for car benefits that have been “payrolled”.

PAYE, Student Loan and CIS Deductions

A major monthly event on Monday 19th November that, if it applies to you, should not only be stamped on your calendar, but etched into your mind.

PAYE, student loan and CIS deductions are particularly significant to employers who make payments on behalf of their employees by making deductions directly from their salaries. This is also relevant to contractors who have issued payments to subcontractors under the Construction Industry Scheme (CIS).

Many will make the payment electronically and funds from these payments are expected to have cleared by 22nd November, 2018. Payments that have failed to clear by this date will incur interest charges and other penalties may also apply, so fair warning!

Be aware that payments, on behalf of your employees, for income tax, national insurance and student loans should be made to HMRC. This also applies to contractors making tax payments on behalf of subcontractors under the Construction Industry Scheme, as these will also need to be made to HMRC.

That’s everything for now, but check in with again soon as we will have more updates for December as we gear up for seasonal cheer and festive frivolities!

More to Come

We’ll be updating this post in November to make sure all the other latest news and updates are at your finger-tips.

You’re here because you’re keen to learn of the latest developments in the world of accounting. We’re here with this blog post because we’re keen to put you in the picture. In fact this is the first in an intended ongoing series of monthly blog posts that will keep you up to date with all the need to know info from the modern accounting world.

So, be sure to check in with us on a regular basis for updates that are sure to pique your interest and alert you to any need to know changes. In this blog post we’ll be covering all the latest October news, from phishing emails to the UK budget.

Tax and NI Contributions

No, we haven’t skipped autumn and winter and gone right on through to spring, it is still October. However, some employers will need to make their tax and national insurance payments by the 22nd of October, 2018.

How come? Well, you probably suspect this already, but let’s clarify and confirm for you. The tax and national insurance payments are, in this case, required to satisfy a 2017/18 PAYE Settlement Agreement.

This 2017/2018 PAYE Settlement is particularly relevant to employers who have one of these agreements in place to satisfy the tax and national insurance contributions for their employees for the financial year ended 5th April, 2018.

The payment can be made electronically, and in such cases the funds will need to have cleared by 22nd October, 2018. This might be a bit of a tight deadline by the time this has been published, but hopefully you have all your ducks in a row and have everything set up in good time.

£15.6m Discovered in Minimum Wage Underpayments

HMRC has revealed a total of £15.6m in minimum wage underpayments. This is double the amount underpaid in 2016/2017 and the highest figure since the debut of the National Minimum Wage.

Information from HMRC also revealed that 200,000 workers were affected by the underpayments. As a result of the findings £14m has been handed down to employers in fines. Workers within gig economy sectors, as well as social care and retail, are amongst those that HMRC believes are most at risk.

Updated HMRC Phishing Guidelines

HMRC has provided the latest advice on how to spot phishing emails and texts, and how to identify genuine contact from the organisation. It’s quite a detailed document, so do take your time reading through it to avoid becoming a victim. You can familiarise yourself with all the essentials by clicking here.

Defaulting on Tax Payments

An updated list of deliberate tax defaulters has been released by HMRC. The individuals are listed as deliberate tax defaulters due to apparently declining to provide a “full and immediate disclosure when HMRC started to investigate or prior to any investigation”.

These tax defaulters have incurred penalties because they have deliberately supplied incorrect paperwork to HMRC, decline to fall in line with HMRC demands or fallen foul of VAT or excise regulations.

UK Budget

It has been announced that the UK budget will be revealed on 29th October. Brexit uncertainty will no doubt have hampered Chancellor of the Exchequer, Philip Hammond, as he prepares to lay out the budget which will affect the entire UK. However, there are other factors, such as the NHS budget, which some are saying will necessitate a rise in income tax. Political and financial pundits are predicting updates to tax rates and reliefs to help to raise income tax.

Survey Time

Another month, another survey. How do small businesses feel that a so-called “No Deal” Brexit will affect them? Yes, Brexit news continues to dominate the media, but the Federation of Small Businesses (FSB) has conducted a survey of 1,234 small businesses that has yielded some interesting results.

For instance, do you find it surprising that 41% of the businesses surveyed who believe a no deal Brexit will impact their business, haven’t taken any action to limit the impact? How about this? A meagre 14% of small businesses have actually begun to plan for no deal.

You can read the full FSB press release here and come to your own conclusions.

Self Assessment “Paper” Tax Returns

Major news for those who usually submit so-called “paper” self-assessment tax returns. If anyone misses the 31st October 2018 deadline for the paper version, they will need to submit it electronically. Those who have missed the deadline and don’t wish to submit their self-assessment electronically will be fined a minimum of £100, regardless of the timely payment of any taxes.

Class 2 National Insurance

There had been suggestions that self employed Class 2 national insurance contributions would come to an end from April 2019. Class 2 national insurance is a low-cost way for the low-profit self-employed to maintain their state pension. A study has been carried out to evaluate the viability of a plan to abolish Class 2 contributions, but this plan has been shelved, for now.

Robert Jenrick, Exchequer Secretary to the Treasury, has said: 'A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the State Pension rise substantially. Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this parliament, given the negative impacts it could have on some of the lowest earning in our society.'